“To encourage flow of savings in financial instruments and improve the depth of domestic capital market, it is proposed to introduce a new scheme called Rajiv Gandhi Equity Savings Scheme,” Mukherjee said, presenting the

“The scheme would allow for income tax deduction of 50 percent to new retail investors, who invest up to Rs.50,000 directly in equities and whose annual income is below Rs.10 lakh,” he added.

This scheme, details of which would be announced later, will have a lock-in period of three years.

The finance minister also proposed to reduce the security transaction tax (STT) from the existing 0.125 percent to 0.1 percent.

Mukherjee proposed to allow Qualified Foreign Investors (QFIs) to access the Indian Corporate Bond market, besides simplifying the process of issuing Initial Public Offerings (IPOs) and lowering their costs to help companies reach more retail investors in small towns.

He said it will be mandatory for companies to issue IPOs of Rs.10 crore and above in electronic form through the nationwide broker network of stock exchanges.

He also said that there should be opportunities for wider shareholder participation in important decisions of the companies through electronic voting facilities.

To encourage greater foreign participation in the Indian capital market, he proposed permitting two-way fungibility (the ability to substitute one unit of a financial instrument for another unit of the same financial instrument) in Indian depository receipts subject to a ceiling.

During the 2011-12, the government had raised Foreign Institutional Investors (FIIs) investment limit in long-term infrastructure bonds, corporate bonds and government securities.

The limit on External Commercial Borrowings (ECB) has been raised and qualified foreign investors are allowed to invest in specified Indian mutual funds and directly in equities.